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KINIBIZ I have read the Letter of Support dated March 14, 2013 issued by the Malaysian government through Finance Minister Najib Abdul Razak to 1MDB Global Investments Limited (the issuer), 1Malaysia Development Berhad (1MDB) and BNY Mellon Corporate Trustee Services Limited (‘Trustee’).

Because this document is given the title ‘Letter of Support’, there has been much confusion and misunderstanding as to whether the government would be liable under it.

The Letter of Support is governed by English law which is substantially similar to Malaysian law in this area, both being common law systems. English law looks to substance and not form. Names, titles given to documents like guarantee, indemnity, letter of support, letter of comfort, etc, are not very helpful in their interpretation.

What a court does is to examine the intention of the parties as expressed in the language they have chosen, review the document in its entirety, and then objectively determine the substance of the relationship of the parties. In commercial matters between large corporate players, a court adopts a robust approach to commercial realities.

Finally, the genesis of the transaction and its background are vital.  Incidentally, the leading case in English law concerns a Malaysian company. See Kleinwort Benson Ltd v. MMC Bhd [1989] 1 All ER 785 [CA].  I propose to consider the Letter of Support in that light.

The underlying transaction referred to in the Letter of Support is the creation of a debt of US$3 billion (RM10 billion) by the issuer, which is a wholly owned subsidiary of 1MDB. Full repayment will take place in 10 years, that is, by March 2023. The Schedule to the Letter states that interest of US$66 million will be paid in March and September of each year - thus, the annual interest is US$132 million...

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TOMMY THOMAS is a prominent lawyer specialising in corporate litigation and insolvency, and commercial and public law. He has appeared in litigation involving bonds and other sophisticated financial instruments, and has dealt with administrative, labour and constitutional cases.

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